Businesses unsure about economic recovery

By Amanda Memrick

Published: Friday, October 18, 2013 at 04:05 PM.

North Carolina businesses still have a guarded view about the next six months, according to an economic survey by PNC Bank. PNC economist Mekael Teshome calls it a cautious optimism and said there are three causes for their caution:

- Speed bump in the economy: Business slowed down in the spring and summer and the survey came on the heels of that slowdown.

- Two-track recovery: Areas in diverse economic areas surrounding metropolitan areas, like Gaston County, are doing relatively well, but smaller cities still deeply dependent on manufacturing are still struggling. “You have a tale of two recoveries going on,” Teshome said.

- Major policy changes: Lots of change at both the state and federal level creates a cloud of uncertainty, prompting businesses to pause.

If the survey holds true, the next six months will bring steady growth and hiring with no real acceleration but no slowing down, either, Teshome said. Most businesses — 77 percent — say implementing the Affordable Care Act won’t make a difference in their businesses, but 17 percent reported that it would lead them to reduce the number of employees they hire in the coming year. “So the way we interpret that is that overall, that’s a minority of business owners. So really from the big macro picture, it won’t have a massive negative impact on the labor market,” Teshome said. “The flip side is it’s a sizable minority, so it may have — at least in the near term — it may have some negative effect on the job market.” The business owners’ response may also be a defensive position about the unknown, he said.

“It the Affordable Care Act gets implemented as is, businesses that want to grow will have to grow no matter what, so they’ll adjust,” Teshome said. More than two-thirds — 68 percent — of business owners reported that they plan to spend on capital investments. “Businesses are playing it safe. It’s a lot safer to make an investment in technology because you know what you’re getting,” Teshome said. “It’s a safer investment than adding (to the) head count.”

You can reach Amanda Memrick at 704-869-1839 or twitter.com/AmandaMemrick.

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North Carolina businesses still have a guarded view about the next six months, according to an economic survey by PNC Bank. PNC economist Mekael Teshome calls it a cautious optimism and said there are three causes for their caution:

- Speed bump in the economy: Business slowed down in the spring and summer and the survey came on the heels of that slowdown.

- Two-track recovery: Areas in diverse economic areas surrounding metropolitan areas, like Gaston County, are doing relatively well, but smaller cities still deeply dependent on manufacturing are still struggling. “You have a tale of two recoveries going on,” Teshome said.

- Major policy changes: Lots of change at both the state and federal level creates a cloud of uncertainty, prompting businesses to pause.

If the survey holds true, the next six months will bring steady growth and hiring with no real acceleration but no slowing down, either, Teshome said. Most businesses — 77 percent — say implementing the Affordable Care Act won’t make a difference in their businesses, but 17 percent reported that it would lead them to reduce the number of employees they hire in the coming year. “So the way we interpret that is that overall, that’s a minority of business owners. So really from the big macro picture, it won’t have a massive negative impact on the labor market,” Teshome said. “The flip side is it’s a sizable minority, so it may have — at least in the near term — it may have some negative effect on the job market.” The business owners’ response may also be a defensive position about the unknown, he said.

“It the Affordable Care Act gets implemented as is, businesses that want to grow will have to grow no matter what, so they’ll adjust,” Teshome said. More than two-thirds — 68 percent — of business owners reported that they plan to spend on capital investments. “Businesses are playing it safe. It’s a lot safer to make an investment in technology because you know what you’re getting,” Teshome said. “It’s a safer investment than adding (to the) head count.”

You can reach Amanda Memrick at 704-869-1839 or twitter.com/AmandaMemrick.